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Oops! They Did It Again

The USA’s Counter-Diplomacy in Promoting the Framework Convention

22.06.2022

When they finally joined negotiations on the proposed business and human rights (BHR) treaty, the USA immediately called for ‘exploring alternative[s]’ to the current draft, including a potential framework convention. In this post, I argue that the USA is engaged in counter-diplomacy and call on States to continue negotiating based on the 2021, Third Revised Draft of the Open-Ended Intergovernmental Working Group (OEIGWG).

Admittedly, an accusation of counter-diplomacy is a significant one. It suggests a State is working to undermine efforts to protect human rights. Traditional diplomacy uses persuasion and negotiation to secure a State’s national interests. Human rights diplomacy uses the same methods to convince States to advance human rights or dissuade them from acting contrary to human rights. Human rights counter-diplomacy, on the other hand, is aimed at undermining human rights protections and is employed ‘for the simple purpose of maintaining power and privilege or out of an unwillingness to confront prejudice and bigotry’ (O’Flaherty et al. 2011, p.30). While I do not intend to accuse the USA of bad faith per se, I believe the USA’s conduct will undermine the development of appropriate human rights standards. In the following, I explain the primary issues a BHR treaty needs to address. I then consider the progress that has been made towards meeting these needs within the current draft treaty before indicating how a framework convention would undermine this progress. Finally, I consider what might be motivating the USA to act in a way that undermines this progress.

The Purpose of a BHR Treaty

In order to be effective, a BHR treaty needs to respond to international and domestic legal standards that effectively insulate many corporate actors from human rights oversight or accountability. Namely, the (purported) lack of international legal obligations; their (exclusively) profit-driven purpose; separated corporate personalities within complex corporate structures and supply chains; and significant protections under investment law. Currently, businesses are assumed to not have international legal personality (an assumption I have previously questioned) so their obligations are defined by domestic law. In Anglo-American systems, this requires businesses to prioritise profits for their shareholders or members over other competing interests. Even when a business originates in a legal system that does not require profit as a primary goal, research shows businesses frequently adopt the Anglo-American approach once they move into the international trading system. This can undercut corporate commitments to human rights, as the latter (if done properly and seriously) can be costly. The cost of human rights due diligence (HRDD) can incentivize parent companies or international brands to transfer risky operations and HRDD responsibilities to others in their corporate group or supply chain. In doing so, businesses can also limit their human rights liability. Currently (with notable exceptions), parent companies and international brands define their own responsibility for human rights and can transfer the risk and responsibility for human rights to a subsidiary or a supplier. Meanwhile, States’ regulatory and adjudicative jurisdiction is limited to the businesses incorporated in or operating in their territory or jurisdiction. If a parent company adopts harmful policies or operations but transfers the riskiest aspects of those operations to a foreign subsidiary, the parent’s home state may not have jurisdiction over the subsidiary and the subsidiary’s home state(s) may not have jurisdiction over the parent. As a result, victims will not have a natural venue for pursuing accountability. Finally, international investment law allows transnational corporations the opportunity to challenge regulatory changes adopted in the interest of human rights and environmental protection if they would negatively affect the profits of their subsidiary companies.

These legal standards are interrelated, and comprehensive reform is needed to effectively protect human rights. Sadly, States have worried that individual action on these issues will place them at a competitive disadvantage economically (see, Swiss NAP 2020-2023, p. 8). As such, States called early in the negotiations for ‘a mandatory regulatory framework’ (UN HRC/37/67, para 20) that would place them on equal footing.

To address these issues, a strong treaty will have to:

  1. affirm or define the rights individuals have against businesses,
  2. require States to adopt domestic HRDD laws that require businesses to assess not only their direct conduct but that of their corporate groups or supply chains
  3. clarify which States will have jurisdiction over remedial claims,
  4. establish standards for mutual legal assistance, and
  5. address the relationship between these obligations and a State’s investment law obligations.

Accomplishing these five goals would not create new direct, international obligations on businesses or change their general, profit-driven purpose. But it would establish a minimum regulatory standard, ensuring fair competition between states and encouraging businesses to pursue profit in a way that respects human rights.

The Pursuit of a Comprehensive Treaty

Against this backdrop, the current Third Revised Draft negotiated by the OEIGWG includes several important features:

  1. A statement of victims’ rights and States’ obligations to protect victims.
  2. A commitment to make HRDD mandatory and require businesses to communicate their findings including through public and periodic non-financial disclosures (articles 6.3-6.4).
  3. An acknowledgement of the differentiated impacts this will have on transnational corporations versus micro-, small- or medium-sized enterprises so that appropriate measures can be adopted to support business compliance (article 6.6).
  4. Commitments to administrative, criminal, and civil sanctions, including penalties for breaching HRDD standards (articles 6.7, 8).
  5. Clarity over which States have adjudicative jurisdiction over remedial claims (article 9), and standards for statutes of limitations (article 10).
  6. Obligations of international cooperation (article 13) and mutual legal assistance in transnational cases (article 12).
  7. A commitment to ensuring international investment agreements comply with the BHR treaty (article 14.5).

This would provide a consistent (albeit not uniform) regulatory approach between States and would impact the global operations and relationships of businesses that are incorporated in, or operating within, a State party. This suggests the treaty will have extraterritorial impacts.

The current draft has taken seven years of thoughtful negotiation. A comprehensive approach was chosen even though States were presented with a variety of potential treaty forms at the second session of the OEIGWG. This included a discussion of a framework convention (para 98), and other framework conventions were frequently referenced during the development of the current draft (paras 21, 56, 65, 78 and para 82). Early in the negotiations, Doug Cassell and Anita Ramasastry helpfully and extensively detailed options for the treaty’s form, building on existing treaties. They noted that framework conventions, by their nature, are neither comprehensive nor unified. They typically include general or high-level commitment with more specific obligations reserved for optional or additional protocols. They can secure commitments quickly but are unlikely to include significant substantive commitments. ‘The main disadvantage of such a ‘framework’ approach’ Cassell and Ramasastry recognise, ‘is that it would not initially be likely to achieve what treaty proponents principally seek: legally enforceable corporate accountability and access of victims to effective remedies’ (p.25).

Claire Methven O’Brien has, rather brilliantly, redlined the current OEIGWG draft to demonstrate how it could be adapted to a Framework Convention. O’Brien’s version offers important contributions, such as consolidating bulky language on the meaning of due diligence. But, it otherwise bears out Cassell and Ramasastry’s warnings. For example, O’Brien’s draft fully eliminates the OEIGWG draft’s commitments on securing access to remedies for victims and ensuring investment agreements comply with the BHR treaty. Similarly, where the OEIGWG draft requires States to legislate due diligence, O’Brien’s does not. Instead, states are only expected to ‘recognise’ that businesses ‘should perform’ due diligence and will ‘undertake to provide’ penalties that encourage that (redlined article 6). The binding commitments of the OEIGWG draft are gone.

An additional drawback to a framework convention is that optional or differentiated commitments (when any such commitments are eventually introduced) would allow States to continue to use economic regulation of human rights competitively, seeking to secure advantages in investments instead of comprehensive reform to a complicated system.

In contrast, Cassell and Ramasastry recognise that the UN Convention against Corruption, a conventional treaty, offers the benefits of bringing together prevention, sanctions and international cooperation to combat corruption (Cassell and Ramasastry, 2016, p.27). The drawbacks primarily stem from the substance rather than the treaty’s form (it does not provide for civil remedies, and it lacks an international legal enforcement mechanism). The larger problem with a conventional treaty is that it will require greater commitments by States and may not be ratified as quickly, if at all. Yet, a conventional treaty can employ, and enjoy the benefit of, peer pressure to facilitate ratification and enforcement.

The Current Draft’s Impact on Non-Parties

If the purpose of a comprehensive treaty is to ensure regulatory consistency amongst States Parties, the consequence for non-party States is that they do not control their economic and regulatory destiny as firmly as they would without the treaty. Under the treaty, a business will need to account for its impacts and relationships even if those occur on the territory of non-party States. Those non-parties would lose any competitive economic advantage from looser regulations. Alternatively, companies incorporated in non-party States can enjoy the benefits of a State’s looser regulations only if they forfeit operations and markets in States Parties. Put differently, strong, and consistent implementation of the Third Revised Draft is likely to crowd out other States’ regulatory ‘looseness.’ This can encourage non-party States to join the treaty to participate in further developments and implementation efforts.

A Counter-Diplomatic Proposal

The sketched situation poses a problem for the USA. To its credit, the USA tends to ratify only human rights treaties it is already complying with, meaning they generally garner limited partisan, ideological difference. A BHR treaty, which would reform the USA’s approach to economic governance and corporate purpose, does not meet that condition for ratification. The current draft would require the USA to pursue regulatory reform at the federal level and within each of its 50 federal states. The current political environment makes ratification of this kind of treaty even more unlikely than usual. Entrenched ideological differences have led to significant disputes about corporate regulation generally, and for workers’ rights specifically, making it unlikely a BHR treaty could receive the Constitutionally required support of 67 Senators anytime soon. In other words: the USA simply cannot and will not ratify a BHR treaty in any form anytime soon. Yet, under the current draft, the USA would be indirectly subjected to the treaty’s provisions despite its resistance to, and internal ideological disputes over, the treaty’s approach.

In light of this, the USA essentially has three options: First, it can use traditional diplomacy after the adoption of the treaty to seek exemptions for its own businesses; second, it can use human rights counter-diplomacy after the adoption of the treaty to stop other States from ratifying and complying with the treaty; or lastly, it can use counter-diplomacy within the context of treaty negotiations to limit the scope and impact of the treaty. The latter two options can incur a significant economic cost: traditionally, the USA has used aid and trade packages to pressure States into complying with its interests. Instead, historically the USA has joined negotiations to ensure its interests remain represented within the text of a treaty it cannot and will not ratify but could be impacted by. An example of this is the USA’s involvement in negotiating the Rome Statute to the International Criminal Court.

Similar to the BHR treaty, the likelihood that the USA would be unable to ratify the treaty raised concerns about its impact on American personnel. The Court has jurisdiction over crimes committed by nationals of non-State Parties (e.g., Americans) on the territory of a State Party. To protect its own interests, the USA negotiated the adoption of article 98. That article prevents the Court from proceeding with a request for surrender from a State Party (e.g., Afghanistan, Colombia, or Nigeria) if doing so would require the State Party to breach an international commitment (like this, this, or this) to not surrender personnel sent from a non-State Party (e.g., the USA) absent that latter state’s consent. This contrasts with the normal commitment of States Parties to ‚cooperate fully’ with the Court’s investigations (article 86). Following the adoption of the Rome Statute, the USA negotiated numerous ‘Article 98 agreements,’ or what have become known as ‚impunity agreements.‘ This effectively hamstrings the Court’s ability to investigate crimes committed by the American military in places like Afghanistan and undermines States Parties’ commitment to international justice.

In other words, knowing it would not ratify the treaty, the USA negotiated a treaty provision that effectively undermines the purpose of the treaty and allows the USA to avoid any impact from the treaty.

While others refer to counter-diplomacy as ‘bad faith contestation,’ I do not intend to accuse the USA of bad faith per se. It made numerous positive contributions to the negotiation of the Rome Statute (Schabas, 2004, p.709), but ultimately it is representing only its own national interests. With the BHR treaty negotiation, those interests place it at odds with the purpose of the BHR treaty and the communal development of necessary human rights standards. It is noteworthy, however, that the USA has not proposed an alternative treaty text. Instead, it has proposed a vague idea that would restart negotiations from the beginning. That places at odds a clear and comprehensively negotiated treaty against a hypothetical ideal approach that has no content and therefore cannot be fully assessed or critiqued. The mythical, perfected treaty is being used as an enemy of a good (imperfect) negotiation.

If the USA is making this proposal in good faith—a proposition I would be delighted by—it should produce a draft framework convention of equivalent strength and scope to the current Third Revised Draft so that a real discussion about the benefits and drawbacks of the (then) two proposed drafts can be debated. Without that, the only impact of the USA’s current call is to delay progress and risk watered down commitments. This is not in the international community’s interest.

Conclusion

There is little reason to tempt the USA to the negotiating table for a treaty it will not ratify no matter what design is proposed. There is much to critique on the internal contents of the Third Revised Draft but rather than pursuing a new and currently undeveloped framework convention, States should continue to negotiate a comprehensive treaty that, even if implemented imperfectly, aims to address the serious problems that have hampered the realisation of human rights to date. The Third Revised Draft provides that opportunity and States need to remain committed to it.

Autor/in
Tara Van Ho

Tara Van Ho is co-Director of the Essex Business and Human Rights Project, co-President of the Global Business and Human Rights Scholars Association, and a member of the IELCollective Steering Group.

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